Impact Loans

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Refinance Guide

Exploring Your Refinance Options

Once you’ve identified your refinance goal, it’s time to figure out which kind of loan can help you get there. Let’s talk about which loan features are best for helping you lower your payment, take cash out or shorten your mortgage term.

Lower Payment

Looking to get more flexibility in your monthly budget? Here are a few different ways to lower your mortgage payment.

Lower Your Interest Rate

If you’re interested in getting the lowest rates available, you might want to consider an adjustable rate mortgage (ARM). ARM rates are typically lower than fixed rates because of the risk that your rate could increase after the initial fixed-rate period is over. However, if you’re planning to move or refinance in the next 5 to 10 years, an ARM could be a good option for you.

Keep in mind that refinancing with a lower interest rate doesn’t guarantee that your payment will be lower. A lower rate will shrink the interest portion of your monthly payment, but many factors – such as your term, taxes and insurance – affect how much you’re required to pay each month.

Change Your Mortgage Term

If having a lower payment is more important to you than paying off your loan quickly, then changing your mortgage term could be right for you. Lengthening your mortgage term allows you to stretch your payments out, which makes each payment smaller. Going from a 15-year term to a 30-year term, for instance, is a great way to lower your payment.

Once you’ve identified your refinance goal, it’s time to figure out which kind of loan can help you get there. Let’s talk about which loan features are best for helping you lower your payment, take cash out or shorten your mortgage term.

Lower Payment

Looking to get more flexibility in your monthly budget? Here are a few different ways to lower your mortgage payment.

Lower Your Interest Rate

If you’re interested in getting the lowest rates available, you might want to consider an adjustable rate mortgage (ARM). ARM rates are typically lower than fixed rates because of the risk that your rate could increase after the initial fixed-rate period is over. However, if you’re planning to move or refinance in the next 5 to 10 years, an ARM could be a good option for you.

Keep in mind that refinancing with a lower interest rate doesn’t guarantee that your payment will be lower. A lower rate will shrink the interest portion of your monthly payment, but many factors – such as your term, taxes and insurance – affect how much you’re required to pay each month.

Change Your Mortgage Term

If having a lower payment is more important to you than paying off your loan quickly, then changing your mortgage term could be right for you. Lengthening your mortgage term allows you to stretch your payments out, which makes each payment smaller. Going from a 15-year term to a 30-year term, for instance, is a great way to lower your payment.

Want to Eliminate PMI?

See how PMI Advantage can help you lower your monthly payment.

Take Cash Out

There are a lot of loan options to choose from if you’re looking to get cash out. It all depends on your situation and goals.

If you’re simply looking to take out as much cash as possible, a 30-year loan is probably your best bet. Since you’re upping your loan amount by taking cash out, the 30-year term will give you the lowest monthly payment.

If you’re taking cash out with a goal of becoming debt-free, a shorter term could be a better choice. You could use your cash to pay off credit cards and other debt while paying off your home and saving on interest.

Whether you go with a conventional or an FHA loan depends on your personal situation. For many homeowners, an FHA loan is less expensive than a conventional loan. However, if you already have a conventional loan, refinancing into another conventional loan could be the right choice. Your lender can help you determine which loan option is the most affordable way for you to take cash out.

Shorten Your Term

Shortening your term is a smart way to pay off your home quickly and cheaply. A shorter term usually has a lower interest rate, and since there are fewer payments, you’ll pay significantly less interest overall.

There are a variety of loan options that make a shorter term possible, and the right one for you will depend on your situation. A conventional loan is a great choice for those with good credit. If you’re a service member or veteran, a VA loan is almost always your best choice. Talk with your lender to see which loan option makes shortening your term the most affordable.

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